Within the next few weeks, former Oak View Group CEO TIM LEIWEKE will be arraigned and appear in court in Austin to face the U.S. Department of Justice’s single-count charge of bid rigging.
Leiweke was indicted Wednesday by the DOJ for an alleged scheme related to OVG winning the job of developing the Univ. of Texas’ Moody Center sports and entertainment venue back in 2018. Several hours after the indictment was made public on Wednesday, Leiweke stepped down from his role as CEO of the company he co-founded with IRVING AZOFF in 2015 and led ever since.
Bid rigging “is as serious as it gets,” said RANDY STUTZ, President of the American Antitrust Institute, and one of three antitrust violations punishable criminally, along with price fixing and market allocation. While the maximum penalty for bid rigging, which is a felony, is 10 years in prison and a $1M criminal fine, several antitrust experts agreed that Leiweke is very unlikely to face anything close to that.
“The government has a very high win rate when it brings these cases,” Stutz said. “The vast majority of them end in plea agreements, negotiated settlements. These are white collar criminals for the most part.”
A search of the DOJ Antitrust division’s archives for “bid rigging” returned a few recent sentencing results:
- June 26: The second owner of a fuel truck supply company sentenced to three months in prison and a $24,000 fine for his part in a scheme to rig bids, commit wire fraud and allocate territories over an eight-year period. The first owner was sentenced earlier in June a year in prison and a $20,000 fine for the same charges.
- June 25: Former VP of Asphalt Paving Company sentenced to six months in prison and a $500,000 fine for his role in multiple conspiracies to rig bids for asphalt paving services contracts in Michigan.
The U.S. Department of Labor, Office of Inspector General and the FBI’s N.Y. Field Office are investigating the case, according to a DOJ press release, while the Antitrust Division’s N.Y. Office and the U.S. Attorney’s Office for the Western District of Texas (where the charge was filed) are prosecuting it.
Following Leiweke’s arraignment, the DOJ will turn over its discovery to Leiweke’s legal team, enabling them to understand what the government has on him and determine whether to fight the charges or settle. A company-wide email sent by Leiweke to OVG employees on Wednesday addressed the indictment.
“It is not true, and I am confident that jurors in Austin will see this case for what it is -- wrong on the facts and the law and a misguided attempt to criminalize the lawful, ethical, and procompetitive efforts of complementary businesses joining forces to deliver a compelling proposal. The Moody Center is a fantastic project and an indisputable success. OVG won the work on the merits of our qualifications and proposal, and we set the bar for NCAA facilities, transforming live sporting and entertainment events for the University of Texas and the City of Austin. At a time when the current administration is trying to promote American enterprise and innovation, this prosecution is inexplicably trying to stifle them.”
If the case goes to trial and Leiweke loses, one of the central factors in bid rigging case sentencing is the “volume of affected commerce,” according to a former DOJ Antitrust division prosecutor who preferred to remain unnamed. That could, in this scenario, refer to the $300M price tag that came with the Moody Center project. It likely doesn’t help Leiweke’s case that the DOJ press release about the case highlighted the Univ. of Texas -- a public institution -- as the victim of the allegedly rigged bidding process. An email Leiweke wrote that was included in the DOJ indictment alludes to that: “We were very clever at putting together a partnership that scared everyone else away. ... This allows us to dictate terms to [the University].”
The companies involved in the bid rigging scenario, OVG and Legends, both paid fines ($15M in OVG’s case, $1.5M in Legends’; both had to be paid within 10 days of receiving the fine in early June). And both companies received non-prosecution agreements (NPAs) from the DOJ. In return for “truthful cooperation” and compliance with the terms of the agreement, both companies were assured by the Antitrust Division that they would not be charged criminally or civilly “for any act or offense committed before the date of this Agreement involving the conduct described in Exhibits A and B.” Each NPA included a confidential list of former and current employees that were covered by the NPA’s terms; Leiweke, clearly, wasn’t on OVG’s covered list.
Wednesday’s indictment kicked up speculation that it might be connected to the DOJ’s active case against Live Nation, which has been a close business partner to OVG since Leiweke founded the company a decade ago. Two of the three antitrust experts that SBJ spoke with found it plausible that the DOJ might lean on Leiweke to provide information against Live Nation. That speculation stems in part from the fact that OVG appeared more than 70 times in the Live Nation complaint but neither the company nor Leiweke were charged.
“The government is often involved in elaborate, strategic negotiations with a variety of different parties that are all designed to gather information and build a very strong case against the non-cooperating parties,” Stutz said. “I’m not in any way suggesting that this indictment is part and parcel of the monopolization case against Live Nation, but one can’t help but speculate that this indictment could ultimately lead to a settlement that leads to a lot of useful information in the case against Live Nation.”
